The Securities and Exchange Board of India (Sebi) has unveiled a suite of novel regulations designed to overhaul the registration process for Foreign Venture Capital Investors (FVCIs).
This bold move redefines the procedural landscape, with designated depository participants (DDPs) now tasked with managing both the registration and post-registration affairs of FVCIs, mirroring the established protocol for Foreign Portfolio Investors (FPIs).
In this revamped framework, prospective FVCIs must engage with a DDP to secure their registration certificate. An important stipulation is that the DDP and the custodian for the FVCI must be the same entity, a notable shift from the previous system where Sebi itself directly supervised the registration and due diligence processes.
A notification from Sebi, dated September 6, underscores a critical stipulation: no entity can engage in securities trading as an FVCI without an official certification from a DDP on behalf of Sebi.
This mandates that FVCIs must navigate through the DDPs to obtain the essential certification required for lawful operation within the Indian financial markets.
Further, these regulations stipulate that FVCIs must designate a domestic custodian. This custodian plays a pivotal role in overseeing the FVCI’s investments within India and ensuring compliance with regulatory norms through regular reporting to Sebi.
This mechanism is designed to enhance transparency and ensure adherence to regulatory requirements, thereby fortifying the integrity of investment operations.
The overarching objective of these changes is to streamline and simplify the registration process, thus alleviating the complexities and administrative burdens previously encountered by FVCIs. By reallocating the registration responsibilities to DDPs, Sebi aims to accelerate approval times and diminish the regulatory load on both itself and the investors.
These new directives represent Sebi’s commitment to refining the regulatory environment for foreign investors in India. The reforms are intended to bolster the market’s attractiveness and accessibility while upholding rigorous standards of compliance and transparency.
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